Posted on 01/09/2010 9:46:42 AM PST by Captain Peter Blood
About a year ago I saw an article about the Argentinean Government proposing a bill that would in effect nationalize all of their 401K/IRA type retirement accounts.
Well as of November, 2009 that has now become a reality, over $29 Billion in retirement accounts have now been seized by the Government and they will use that money to pay down debt.
As I remember the plan the poor owner of that account would get Government issued bonds that will pay between 2 and 3% to replace those monies the government takes. You can read this article from the London Telegraph here: http://blogs.telegraph.co.uk/finance/ambroseevans-pritchard/5504137/Argentina_seizes_pension_funds_to_pay_debts_Whos_next/
Now when I read that about a year ago I predicted then that it would only be a matter of time before some “bright” people on the Democratic Party’s Left would see this and think that would be a good idea here.
Well in Karl Denniger’s Market Ticker, dated 1/8/2010; http://market-ticker.org/, there is such an article about plans being made in this country to do the same thing.
The following story is from Businessweek:
Americans Oppose Initiatives Limiting 401(k) Choices, ICI Says January 08, 2010, 10:30 AM EST
By Jeff Plungis Jan. 8 (Bloomberg) -- U.S. investors oppose federal initiatives that would force them to give up control over their 401(k) accounts, the Investment Company Institute said.
Seven in 10 U.S. households object to the idea of the government requiring retirees to convert part of their savings into annuities guaranteeing a steady payment for life, according to an institute-funded report today.
“Households’ views on policy changes revealed a preference to preserve retirement account features and flexibility,” the institute, which represents the mutual-fund industry, said in the report.
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
The institute’s member companies manage $11.6 trillion of assets in mutual funds, including employer-sponsored 401(k) accounts. Some lawmakers have questioned the public-policy value of the tax benefits for people investing in retirement accounts, the ICI said in a report today.
The average 401(k) fund balance dropped 31 percent to $47,500 at the end of March 2009 from $69,200 at the end of 2007, according to a Fidelity Investments review of 11 million accounts it manages. The Standard & Poor’s 500 Index tumbled 46 percent in that period. The average balance of the Fidelity accounts recovered to $60,700 as of last Sept. 30 as the stock market rebounded.
Senator Herb Kohl, chairman of the Senate Special Committee on Aging, proposed legislation on Dec. 16 to require fund companies to do more to ensure 401(k) options are appropriate for workers. The Wisconsin Democrat cited reports that target- date funds designed for people retiring in 2010 invested in high-yield, high-risk corporate bonds.
Representative George Miller, a California Democrat, is advocating legislation to require more disclosure about 401(k) fees paid by investors. The Education and Labor Committee, which Miller leads, approved a bill requiring more disclosure about fees in June.
The ICI survey was based on a telephone survey of 3,000 households from Nov. 20 to Dec. 20 and had a sampling error of plus or minus 1.8 percent.
--With assistance from Theo Francis in Washington. Editors: Tina Davis, Chris Thompson To contact the reporter on this story: Jeff Plungis in Washington at +1-202-624-1835 or jplungis@bloomberg.net. To contact the editor responsible for this story: Rick Levinson at +1-212-617-3377 or Rlevinson2@bloomberg.net.
Make no mistake this is a prelude to a takeover of U.S. 401K/IRA retirement funds. In return for this confiscation of your monies the Federal Government will give you a so called annuity, i.e. worthless bonds, paying you a paltry 2 to 3%. Not even market interest rates for the use of “YOUR” money.
The need for this is obvious for those following the Bond Market. We are deficit spending monies that can’t be sustainable, those countries that have been buying our debt are either drastically slowing their purchases or no longer buying at all. So it is time to tap another source of monies and that is our retirement accounts. The consequences of this are almost indescribable. The effect on the Financial Markets, etc. will be, in my opinion, catastrophic. Use you own imagination.
Those saving for retirement, those hoping to live a dream in the future, etc., will find those things harder to do and plan for with the kind of return being given. But then again with the state of this country’s finances you are basically seeing your hard earned money being thrown down a dark abyss, all for the sake of Government spending.
All told in Fiscal Year 2010 for the Federal Government the U.S. Treasury needs to finance approximately $3.5 Trillion of new spending, not to mention the fact the refinancing of older debt coming due, this will push borrowings to around $7 Trillion plus. With financing options becoming limited the Trillions in retirement accounts look very attractive.
Lets add to this another facet that I believe will emerge also, it won’t be enough that the Government will be confiscating retirement accounts, to keep the game going even further they will find at least one other way to get monies to finance the debt.
That way will be forcing us, the workers, to have a portion of our payroll checks deducted to buy Bonds. Once upon a time many years ago there used to be the payroll deduction program that many companies had in effect so that you could voluntarily have a portion of your payroll check deducted to buy U.S. Savings Bonds. Back then that was a good deal and a nice way to save for your children’s college, etc.. Well now it will be more insidious.
You will see your hard earned money taken and you will be given low interest bearing bonds that will be essentially worthless.
The future right now looks bleak and unless common sense, real Political Leadership emerges we as a country will find all of our savings and built up assets forfeited to the U.S. Government and we will all be wiped out with nothing to fall back on.
Liquidate it? Don’t they force you to put it into an IRA?
I’m going cash out everything I have in banks and in my investments, put it into sealed coffee cans and bury it...somewhere. (Can’t give the precise place since the commies in the Obama administration may be monitoring this thread).
Pitchforks anyone?
Looking for advice. Hubby starts new job soon that offers a 410k, should we just forget it and invest otherwise? We are in no way are well off and really need money for retirement (25+ years from now).
What I think they will do is raise the tax liability on all 401 K accounts.
401 K contributions are tax free until you take it out at retirement or under a hardship reason (10 % penalty).
It would not surprise me at all to see taxes as high as 75 % of accounts over a million and moving down to "only" 50 % on accounts over $100,000
After all, a large percent of the money in your 401 K is company matches which I'm sure will somehow morph into dem talking points that loss tax revenue the government didn't get in the first place
I would join the 401 K at the lowest contribution % simply because it gives you a head start on being vested. Most companies have a graduated vested structure where you get fulled vested after 5 years
Before you bury it, you had better convert it into a precious metal. Cash will be rendered less valuable by inflation.
I think inflation is the obvious way to steal retirement accounts. The administration doesn’t have to worry about court cases or open rebellion.
The Businessweek article:
http://www.businessweek.com/news/2010-01-08/americans-oppose-initiatives-limiting-401-k-choices-ici-says.html
If the Dems keep their “60”, I believe the next thing you will see is an increase in the SS and Medicare tax.
My mattress just got a little bit thicker.
No such stuff will ever happen; this isn’t even a trial balloon......even out of control ‘Rats know better than to try stunts along this line.
Bump
So they won’t let us personalize our Social Security accounts, but they’ll gladly nationalize our 401k accounts (or tax the hell out them at retirement).
Why retire? Why donate to a 401k if the Feddies will “take care of you”. Just keep working until you drop dead.
It does not require any stretch of the imagination to believe that desperate money-hungry politicians in the future will not hesitate to vilify someone who worked hard and saved up a lot of money for retirement.
You can hear them now... “a person who hoards all of that money for themselves is selfish!”... “who needs more than $1,000,000 in retirement anyway?!”... “it’s so unfair that one person should retire in LUXURY and another should retire in poverty”... “everyone deserves a minimum standard of living in their golden years”... and on and on.
They will steal it in the name of “social justice” and as long as they can get 2 moochers to vote for them in order to cancel out the saver’s 1 vote, they will rob blind those who have worked and saved and then take credit for “leveling the field”.
That is what you get when a country is governed by mob rule. A land of men, not of laws.
It all started with the progressive tax code.
Taxes for thee, not for me.
Sickening!
investment ping
Yeah “The great One”Mark levin grilled some professor chick over this on the air a couple years ago!
Remember, annuities are paid for in “tomorrow’s” dollars. You know; the devalued ones?
Why yes, I'll take the pretty pearl handled one please!
“It would be worth it to me to liquidate the whole 401K and take the tax hit now, in the long run I’d be money ahead.”
Why not borrow against your 401k and starve the beast by not paying the taxes? Buy silver, gold and lead with the money and pay yourself back over time with interest. At least you will have some immediate inflation protection with the silver/gold and if they make a grab for your 401k you will have the lead to do what our forefathers prepared us for.
After you pay yourself back, repeat the above process.
If the whole financial house of cards collapses you certainly will not have to worry about paying yourself back.
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